Giles Hargreave and Nick Train have been the most consistent FE Alpha Managers of this century, according to FE Analytics, as both managers have beaten their peer group composites in 14 of the past 16 calendar years. 
Investors usually opt for experience when choosing a fund manager, the idea being the longer they have run money, the greater the variety of market conditions they have had to deal with and learnt from.
That being said, and despite the various disclaimers about past performance being no guide to future returns, investors will often feel more comfortable buying a fund run by a manager who has been able to generate performance well ahead of their peers.
FE’s Alpha Manager rating is designed to do just that. It highlights the top 10 per cent of managers in the Investment Association universe for their track records going back to 2000, with extra weighting for managers with the longest track records to highlight the benefits of experience.
To determine the ratings, FE looks at a manager’s ability to create risk-adjusted alpha, outperformance in both rising and falling markets and those who consistently beat their benchmarks.
In this article, we looked at the 25 FE Alpha Managers who have unbroken track records going back to January 2000 to see which have the beaten their peer group composites on the most consistent basis over that time.
Each manager has their own bespoke peer group composite as it includes rivals from each area of the market their fund (or funds) focus on, meaning the results are unbiased no matter whether the manager focuses on equities, bonds or alternatives.
Five most consistent managers of the century
Source: FE Analytics
The table above shows the five managers with the highest number of outperforming years since 2000 (out of 16), their total returns over that period as a whole and their total outperformance relative to their peer group composites over that time. The full list of 25 managers is on page four.
As can be seen, the FE Alpha Managers with the most outperforming years are Marlborough’s Giles Hargreave and Lindsell Train’s Nick Train.
We start with Hargreave, who is one of the most experienced managers in the businesses having started his career in 1969. He has managed eight portfolios since 2000 (which have all been focused on UK small-caps) and still manages five of them today – three of which are open-ended funds, the other two being VCTs.
According to FE Analytics, his returns of 356.63 per cent to his investors between 2000 and 2015 were some 3.3 times greater than the gains made by his peer group composite.
The manager, who is renowned for his highly diversified approach, has only underperformed against his peers in two of the past 16 calendar years. One of those was in 2002 when his funds (combined) fell 25 per cent while the other was in 2015.
Indeed, when we conducted this study last year, he was the most consistent FE Alpha Manager of the century.
However, though he ‘underperformed’ last year (he returned 10 per cent), his £1bn Marlborough Special Situations fund was a top quartile performer in the IA UK Smaller Companies sector with gains of 20 per cent – meaning it was the performance of his Nano Cap Growth fund and VCTs which dragged his overall gains down.
Given his individual performance, it is no surprise that Marlborough Special Situations (which is his oldest fund) has been the best performing member of its peer group since the turn of the century with returns of 773.68 per cent. It has also had the best risk-adjusted returns in the sector and one of the lowest annualised volatility and maximum drawdown.
Nevertheless, thanks to his overall returns last year, Nick Train is now the joint most consistent FE Alpha Manager.
Performance of Nick Train versus peer group composite between 2000 and 2015
Source: FE Analytics
He currently runs the CF Lindsell Train UK Equity fund, the Finsbury Growth & Income trust and Lindsell Train IT and his combined returns of 352.72 per cent over the period in question means he has beaten his peer group composite by 2.7 times.
The only two years he has underperformed were in 2003 and 2009, both of which were strongly rising markets.
His investment style, which revolves around buying high quality growth companies with reliable earnings and strong franchises, has worked very well over recent years as stocks displaying those characteristics have been well sought after in a world of low economic growth and added stimulus.
Indeed, his five-crown rated CF Lindsell Train UK Equity fund (which is now £2.23bn) has been the most consistent performer in the competitive IA UK All Companies sector, having beaten the FTSE All Share in each of the past eight calendar years and outperforming the peer group average in every full calendar year since its launch in 2006.
Outside of Hargreave and Train, there are three FE Alpha Managers that have only underperformed against their peer group composites in three of the past sixteen years – Invesco Perpetual’s Mark Barnett, Jupiter’s John Chatfeild-Roberts and Crux’s Richard Pease.
Barnett’s three years of underperformance were 2005, 2006 and 2009, all of which were rallying markets.
Barnett carved out at a track record as manager of the Invesco Perpetual UK Strategic Income fund and the Perpetual Income & Growth trust, but has been in the limelight more recently for taking charge of Neil Woodford’s multi-billion income funds in 2014.
Though much was made of whether anyone could replace a manager like Woodford, FE data shows Barnett has outperformed his peer group composite in one more calendar year than his old boss has over the past 16 calendar years.
His total returns over the period in question have also been higher than Woodford’s (531.47 per cent compared to 312.61 per cent) – but it must be noted that Barnett has had much more of mid-cap bias in his portfolios over that time and has run more investment trusts than his predecessor.
Performance of Barnett and Woodford versus peer group composites between 2000 and 2015
Source: FE Analytics
That being said, Barnett has also beaten his peer group composite by a greater margin than Woodford (3.15 times from Barnett compared to 2.81 times from Woodford).
Given their similar investment styles, it is little surprise that Woodford’s years of underperformance came at the exact same time as Barnett’s – the exception being the stellar 2013 when Barnett’s greater bias towards mid-caps gave him the edge.
There are five other FE Alpha Managers (along with Woodford) who have beaten their peer group composites in 12 of the past 16 years – Ian Spreadbury, Robin Hepworth, Algy Smith-Maxwell, Jeremy Podger and Nigel Thomas.
For the full list of 25, please click to the next page.
Source: FE Analytics